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PTO has broad discretion in considering extraordinary situations for Patent Term Adjustment

Addressing the U.S. Patent Office’s (USPTO) discretion in connection with patent term adjustments, the U.S. Court of Appeals for the Federal Circuit agreed with the district court that the USPTO acted within its discretion in calculation of a patent term extension. Daiichi Sankyo Co. Ltd. v. Michelle K. Lee, Case No. 14-1280 (Fed. Cir., July 2, 2015) (Reyna, J.).

Daiichi is a pharmaceutical company that owns three patents related to compounds that are useful in treating tissue death due to lack of oxygen, blood clots, and other ailments. Daiichi brought suit in the U.S. District Court for the District of Columbia under 35 U.S.C. § 154, challenging patent term adjustments made by the Patent and Trademark Office (PTO) for two of its patents. The crux of the dispute arises out of the 2010 Federal Circuit decision in Wyeth v. Dudas (IP Update, Vol. 11, No. 11), which changed the way the PTO calculates patent term adjustment. In response to Wyeth, the PTO adopted its “Interim Procedure” for patentees to request reconsideration of patent term adjustment determinations. Under its “Optional Interim Procedure,” for patents issued between August 5, 2009 and March 1, 2010, patentees could file a petition for reconsideration up to 180 days after the issue date, provided that the sole basis for the request was that the patent term adjustment was made under the PTO’s pre-Wyeth calculation method. Because two of Daiichi’s patents issued before August 5, 2009, they were ineligible for patent term recalculation under the Optional Interim Procedure. Daiichi invoked the Optional Interim Procedure for the third patent, but the PTO’s Wyeth adjustment for that patent made no difference, since the three patents were terminally disclaimed over one another.

In connection with the two patents that issued before August 5, 2009, Daiichi filed a petition requesting waiver of the time limit for filing a patent term extension petition under 37 C.F.R. § 1.183, which allows the PTO to waive the time limit in “extraordinary situations.” According to Daiichi, the Wyeth decision was an extraordinary situation. The PTO denied the petition, leading to the present lawsuit.

Daiichi argued that the PTO’s denial of its requests for reconsideration of the patent term adjustment was an abuse of the agency’s discretion. According to Daiichi, Congress authorized the PTO to correct its own mistakes (e.g., in calculating patent terms) whenever they occurred, and the 180-day period was for judicial, not administrative review. The PTO disagreed, arguing that Daiichi could have requested administrative review within two months of the patents issuance, under PTO procedures existing at that time, or requested judicial review as the plaintiff in Wyeth did. Furthermore, the PTO argued that the 180-day period was reasonable in view of Congressional intent that any final adjustment of patent terms be determined quickly after issuance. After the district court agreed with the PTO’s position, granting summary judgment, Daiichi appealed.

In its analysis of the arguments, the Federal Circuit noted that agencies are generally allowed great discretion in making administrative decisions. Specifically, “an agency decision will be set aside if it is arbitrary, capricious, an abuse of discretion, or not in accordance with the law” and “the reviewing court may not substitute its judgment for that of the agency.” In the instant case, the Federal Circuit concluded that the PTO acted within its broad agency discretion to “prescribe regulations establishing procedures for the … determination of patent term adjustments” in adopting the 180-day period in the Optional Interim Procedure.

Daiichi also argued that the PTO erred in disparately treating patents issued before and after August 5, 2009, because patents issued before that date were provided access to the Optional Interim Procedure and those issued after were not. The Federal Circuit disagreed noting that all patentees with issue dates before August 5, 2009 were treated identically, so there was no disparate treatment. Furthermore, the patent statute allows the director of the PTO to prescribe the timeframe for petitions at the PTO, and any timeframe would necessarily result in different treatment for patents issued within the timeframe and those issued even one day outside the timeframe.

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